Gaucho wrote:Diversity is good, but what if I'm just looking for something that I don't have to worry about or look after? Would it be foolish to just buy gold and be done with it?

you could say that same thing about technology stocks in the late 90s and real estate in the past.

'Diversity' isn't what you are seeking, what you need is limited exposure to unnecessary risk. Better than just buying gold would be a fund that includes gold, or and ETF that is physically backed. I think there's an SPDR fund thats gold-backed, and you could probably locate holders and fund managers that own it.

Most ETF's erode over time. They're not set up as "buy and hold" type investment vehicles but are better suited to short term trading, the exact opposite of what Gaucho is looking for.

Oh, and Gaucho, you are looking for diversity. If you were just looking for 'capital preservation' you could invest the money in T.I.P.S. and be done with it. (although in your case you'd have to factor in the FX dollar/euro spread as well.)

It's a good opportunity to sell some of your dogs into the strength, but over the next fews days you're going to see a lot of the 'fiscal cliff' enthusiasm ebb as articles such as this one hit the mainstream media:

I'd say maybe flooded with excess cash and inflated equity values...so a bubble maybe? Our stock is trading around $60 right now, but a lot of analysts have the true value at more around $70. So I feel like it's altleast not a bubble in the financial sector.

Also, I heard an interesting segment on the radio that said a lot of companies, who are flush with cash have been using that money to buy back equity. So I'm thinking that could inflate stock prices, but at the same time wouldn't that be a legit market demand and a positive upward push on prices...not just inflation?

Glad you posted that article. I must say, though...I thought for sure Washington was going to 100% screw things up and not pass anything...I was anticipating a large drop and maybe looking to buy in when it did. Wondering how much of an opportunity the debt ceiling debates will present over the next month or two.

Troy Loney wrote:I'd say maybe flooded with excess cash and inflated equity values...so a bubble maybe? Our stock is trading around $60 right now, but a lot of analysts have the true value at more around $70. So I feel like it's altleast not a bubble in the financial sector.

Also, I heard an interesting segment on the radio that said a lot of companies, who are flush with cash have been using that money to buy back equity. So I'm thinking that could inflate stock prices, but at the same time wouldn't that be a legit market demand and a positive upward push on prices...not just inflation?

Inflate stock prices? To me companies buying back their stock is a sign that they think their stock is undervalued.

Troy Loney wrote:I'd say maybe flooded with excess cash and inflated equity values...so a bubble maybe? Our stock is trading around $60 right now, but a lot of analysts have the true value at more around $70. So I feel like it's altleast not a bubble in the financial sector.

Also, I heard an interesting segment on the radio that said a lot of companies, who are flush with cash have been using that money to buy back equity. So I'm thinking that could inflate stock prices, but at the same time wouldn't that be a legit market demand and a positive upward push on prices...not just inflation?

Inflate stock prices? To me companies buying back their stock is a sign that they think their stock is undervalued.

Well, increase stock prices, increase demand and reduce available supply. In that sense, the gist of that radio piece was that US companies are flush with about a trillion dollars of cash on hand...instead of dividends or distributing money to employees with bonuses or raises...they're buying back stock.

Troy Loney wrote:I'd say maybe flooded with excess cash and inflated equity values...so a bubble maybe? Our stock is trading around $60 right now, but a lot of analysts have the true value at more around $70. So I feel like it's altleast not a bubble in the financial sector.

Also, I heard an interesting segment on the radio that said a lot of companies, who are flush with cash have been using that money to buy back equity. So I'm thinking that could inflate stock prices, but at the same time wouldn't that be a legit market demand and a positive upward push on prices...not just inflation?

Inflate stock prices? To me companies buying back their stock is a sign that they think their stock is undervalued.

JeffDFD wrote:Yeah, a company buying back stock also increases EPS for the stock left out there (that you would have). Don't see where a company buying back stock is bad.

In theory, it's true that Stock repurchases are a positive sign that an "ongoing concern" believies it's stock is cheap relative to other financial instruments.

In practice, companies are notoriously horrible at timing those repurchases.

Having said that, many companies (particularly the Fortune 500) are currently able to float bond issues at rates that are less than those on 10 year Treasuries. That's a very rare and unique opportunity. In such a case it often makes sense for those organizations to actually float a bond issue and use the proceeds to buy back equity.

I think the current stock repurchases are more a result of the lack of other uses for cashflow (Investing back in their business - dicey in a low growth economy such as ours, or Bonds - currently at 'all time' lows, increasing dividends - which organizations must be careful to insure that those dividends are sustainable, or in acquistions), than any real belief that those equities are undervalued.

I agree with most sentiments here...I love me some dividends as well and would rather have a company give me cash then repurchase stock, but all the tax discussions will greatly impact all of this. I am not 100% up to speed on what deal was recently just passed and how effective it will be, but before the deal there was a lot of talk that, if the taxes on dividends go up (and based on how high they may go for how many people) - companies will push more capital to stock buybacks instead of any dividend in order to increase shareholder value. They would rather increase the value of the stock through buybacks because any additional (and current) cash used for the dividend would essentially be increasing the governments cut and do less to put money in shareholder pockets